Tax choice

Taxation
An aspect of fiscal policy
Policies Government revenue Tax revenue Non-tax revenue Tax law Tax bracket Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Double taxation Representation Unions Medical savings account Tax, tariff and trade
Economics Price effect Excess burden Tax incidence Laffer curve Optimal tax Theory Optimal capital income taxation
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Private tax collection Tax farming
Noncompliance Tax avoidance Tax evasion Tax resistance Tax haven Smuggling Black market Transfer mispricing Unreported employment Tax shelter
Distribution Tax rate Progressive Regressive Proportional
Types Direct Indirect Per unit Ad valorem In rem Capital gains Carbon Consumption Dividend Ecotax Excise Georgist Gift Gross receipts Income Inheritance (estate) Land value Payroll Pigovian Property Sales Sin Single Stamp Steering Turnover Value-added (VAT) Corporate profit Excess profits Windfall profits Negative (income) Flat Wealth
International Financial transaction tax Currency transaction tax Tobin tax Spahn tax Tax equalization Tax treaty European Union FTT
Trade Custom Duty Tariff Import Export Tariff war Free trade Free trade zone Trade agreement
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country List of countries by tax rates Tax revenues as %GDP Albania Algeria Argentina Australia Azerbaijan Bangladesh Bhutan Bulgaria Canada China Colombia France Germany Greece Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Namibia Netherlands New Zealand Norway Pakistan Palestinian territories Peru Philippines Poland Russia Singapore South Africa Sweden Switzerland Tanzania United Kingdom United States Uruguay

In public choice theory, tax choice (sometimes called taxpayer sovereignty or earmarking) is the belief that individual taxpayers should have direct control over how their taxes are spent. Its proponents apply the theory of consumer choice to public finance. They claim taxpayers react positively when they are allowed to allocate portions of their taxes to specific spending.

Opinions

Daniel J. Brown examines tax-target plans in educational programs.

Alan Peacock, in his 1961 book The Welfare Society, advocates greater diversity in public services (education, housing, hospitals).

Optimal quantities of public goods

According to Vincent and Elinor Ostrom, it is possible that government may oversupply, and a market arrangement may undersupply, those public goods for which exclusion is not feasible.

Foot voting vs tax choice

Voting with your feet and voting with your taxes are two methods that allow taxpayers to reveal their preferences for public policies. Foot voting refers to where people move to areas that offer a more attractive bundle of public policies. In theory foot voting would force local governments to compete for taxpayers. Tax choice, on the other hand, would allow taxpayers to indicate their preferences with their individual taxes.

In the Tiebout model, for example, there is costless mobility; individuals seek out a jurisdiction that provides exactly the level of output of the public good that they wish to consume. In so doing, they reveal their preferences for "local" public outputs and generate a Pareto-efficient outcome in the public sector. – Wallace E. Oates, On the Theory and Practice of Fiscal Decentralization

Legislative measures

Four bills providing involving tax choice have been introduced by the United States Congress since 1971. The Presidential Election Campaign Fund, enacted in 1971, allows taxpayers to allocate $3 of their taxes to presidential election campaigns. The 2000 Taxpayers’ Choice Debt Reduction Act would have allowed taxpayers to designate money toward reduction of the national debt. The 2007 Opt Out of Iraq War Act would have allowed taxpayers to designate money toward certain social programs. The 2011 Put Your Money Where Your Mouth Is Act would have allowed taxpayers to make voluntary contributions (not tax payments) to the government. These later bills died in committee.

See also

• Hypothecated tax
• Microeconomic reform
• Motivation, Agency, and Public Policy
• New public management
• Nudge
• Participatory budgeting
• Tax reform
• The Other Invisible Hand
• YouCut

Further reading

• Anderson, Lincoln – Velazquez: Funding war should be taxpayers’ choice The Villager. 2007
• Baker, Russell – Taxpayers' Choice The New York Times. 1990
• Binowski, Brittany – Why Mandatory Taxes Are Bad – And How The Government Should Fix Them (But Probably Won't). Forbes. 18 June 2012
• Blinder, Alan S. – The Economics of Public Finance: Essays 1989
• Brown et all, Giving to Government: Voluntary Taxation in the Lab
• Buchanan, James M. – Public Finance in Democratic Process: Fiscal Institutions and Individual Choice 1967
• Buchanan, James M. – The Economics of Earmarked Taxes 1963
• Frey, Bruno & Torgler, Benno – Tax Morale and Conditional Cooperation
• Indiviglio, Daniel. "What If Taxpayers Could Decide How Their Money Is Spent?". The Atlantic. Retrieved 18 April 2012. 
• Jimerson, Jeff – Initiative helps boost taxpayers' 'choice' Walloa County Chieftain. 20 June 2012.
• Kimball, Miles – No Tax Increase Without Recompense. 25 Aug 2012
• Kuznicki, Jason. "How Responsible Are You for Where Your Taxes Go?". The League. Retrieved 18 April 2012. 
• Lamberton, Cait Poynor – A Spoonful of Choice: How Allocation Increases Satisfaction with Tax Payments 2012
• Le Grand, Julian - Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens 2003
• Le Grand, Julian - The Other Invisible Hand: Delivering Public Services through Choice and Competition 2007
• Listokin, Yair and Schizer, David – I Like to Pay Taxes: Lessons of Philanthropy for Tax and Spending Policy 2012
• Maricano, Alain – Why markets do not fail. Buchanan on voluntary cooperation and externalities 2010
• Ostrom, Vincent & Ostrom, Elinor – Public Goods and Public Choices
• Paunic, Alida – Let's make the tax system more lovable
• Wynn, L. S. "What is Personal Tax Earmarking?". wiseGEEK. Retrieved 19 April 2012. 
• Yglesias, Matthew – Giving Taxpayers Choice Could Boost Satisfaction With Big Government And Boost Social Spending Think Progress. 19 April 2011